A common concern I hear from clients is the stigma with filing bankruptcy. Bankruptcy is a legal option that the United States Congress has made available. A debtor should not dismiss Chapter 7 or chapter 13 bankruptcies as an option until they have taken a short time to educate themselves on this subject.

The stigma is perpetuated by creditors who want to discourage debtors from filing bankruptcy, companies who have a financial interest in keeping debtors in debt such as debt consolidation companies, or individuals who simply do not know.

The stigma against debtors has greatly diminished over the past years and particularly in these times where even major corporations are forced to seek bankruptcy protection. Under the bankruptcy laws, a debtor cannot be discriminated for employment due to a bankruptcy filling. And while a chapter 7 or 13 bankruptcy can remain on your credit report for up to 10 years, you will begin to rebuild your credit within one to two years. (see our prior posts about bankruptcy and credit.)

Its best if debtors take a minute and explore the legal options made available to them by law. They should not be misinformed by rumors or self-serving statements of companies who have their own interest in mind. Bankruptcy is not an easy decision, but in certain financial situations, it’s the right decision.